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Energy revolution can power Indonesia if policy barrier lifted

President Susilo Bambang Yudhoyono has committed to a greenhouse gas (GHG) reduction target of 26 percent by 2020 with Indonesian financial resources and 41 percent with international support

Sven Teske (The Jakarta Post)
Bangkok
Mon, April 4, 2011

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Energy revolution can power Indonesia if policy barrier lifted

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resident Susilo Bambang Yudhoyono has committed to a greenhouse gas (GHG) reduction target of 26 percent by 2020 with Indonesian financial resources and 41 percent with international support. Despite the country’s growing economy, Indonesia has an electrification rate of only 65 percent — meaning that 35 percent or 92 million people have no access to electricity.

Greenpeace welcomes President Yudhoyono’s commitment and would like to highlight that GHG reduction targets and an increase in electrification do not contradict each other; rather, they support each other. Indonesia’s electrification target of 90 percent by 2020 can only be achieved by using renewable energy, due to its decentralized nature and the very short planning and construction time.

In 2005 Greenpeace published a blueprint, the Energy [R]evolution scenario, of what a sustainable energy supply for Indonesia could look like. In the meantime the renewable energy industry has expanded globally and costs for solar and wind turbines have dropped significantly, making it even easier and more economic to switch from fossil fuels to renewables. An energy revolution offers benefits for the economy, society, local communities and the environment.

Economic benefits, because renewable energies need no fuels and therefore make Indonesia’s power supply independent from volatile fossil fuel world market prices. Solar photovoltaic electricity is already far cheaper than electricity from diesel generators. Decentralized solar-wind-small hydropower systems fit far better with Indonesia’s archipelagic geography than centralized coal power plants.

Better for society, because renewable energy systems are more labor intensive than fossil fuel power plants, but need no fuel. Therefore, a renewable energy supply requires more investment in labor.

The renewable energy industry will create several hundreds of thousands of new manufacturing jobs through the manufacture of solar collectors, small hydropower systems and geothermal systems both for the domestic market, as well as for export.

 Good for communities because, with a good renewable policy framework from the Indonesian government, communities can organize their own energy supply in parallel with the national plans. With a good renewable energy policy framework bottom-up planning and top down financing is possible, which is the fastest strategy to electrify a huge archipelago like Indonesia.

A mix of different renewable technologies depending on the locally available resources can gradually develop into a connected nationwide energy system. Indonesia’s renewable policy should support the expansion of minigrid-renewable energy systems — called “energy clusters” — by redirecting fossil fuel subsidies towards these new and modern power systems. Once set up, those systems do not need constant subsidies anymore, as they mostly run without fuel.

Indonesia has huge renewable energy potential: Solar, geothermal, small hydro and, in some regions, wind and agricultural residuals for bio-energy can be combined to form a truly sustainable energy supply which can meet the growing energy demand to achieve the nation’s 7 percent annual economic growth target.

What policy framework is needed for an energy revolution for Indonesia?

A secure, reliable long-term energy policy is key and will make or break the development of the strong renewable energy industry that Indonesia needs to power its economic growth. Guaranteed access to the grid — where available — combined with a guaranteed buy back rate for renewable electricity which is fed into the grid, will allow investors and project developers to get a secure finance plan in place.

Greenpeace has developed a “Feed-in Tariff Support Mechanism” (FTSM) which combines the good experiences of feed-in tariffs from developing countries with external finance programs e.g. from the World Bank, the Asian Development Bank or other international finance institutions.

For rural electrification there is an extra need for soft loans in order to guarantee the financing of infrastructure needed and to enable communities to develop their own energy supply. This can be achieved by redirecting the current subsides towards renewable energy community developments.

A renewable energy law — both for on- and off-grid renewables — can not only help to significantly reduce GHG emissions, but can also accelerate Indonesia’s electrification rate. A centralized policy framework that supports decentralized energy clusters for communities will create hundreds of thousands of jobs and will reduce the need for energy subsidies in the mid-term. It is a win-win situation

In my home country Germany, the renewables industry already employs almost 400,000 people and has become one of  Germany’s major growth industries. In 2010, over 7,000 Megawatts (MW) of solar photovoltaics and 1,800 MW wind power was added to the grid.

In reaction to the nuclear tragedy in Japan, the German government switched off seven out of 17 nuclear reactors for security checks. Two reactors were previously shut down, due to a major accident in 2007, while four reactors will be shut down in May this year for maintenance.

So, in May 2011, Germany will have only four nuclear power plants in operation, while 13 are shut down — and there will be no power shortage, as the new renewables will fill the gap.

The energy [r]evolution has already started in many countries — Indonesia, come and join in!

The writer is Greenpeace International’s renewable energy director.

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